US Dollar overbought

01 December 2016, USD/JPY

Wave Analysis:

Yesterday, our stops got hit when the Us Dollar went above 113.25. The cable traded massively long and even broke above the resistance level 113.88 and is currently trading slightly above it. We expect this bullish breakout to be a mere retest of this level and that price should be back below it before the close of this trading day. The latter is highly likely since the intraday stochastic recently bounced off from it's overbought level 80 and is headed towards it's neutrality level, 50. Any clear retracements below 113.76 will signal a possible reversal to the lower side, otherwise as long as the pair continues to rally above 113.88, we expect bullish price movements towards 124.00. Expect a similar price action in USD/CHF, EUR/JPY and an exact opposite price action in EU/USD and GBP/USD.

Trade Recommendations:

Wait for a clear breakout below 113.88 to go short. Otherwise, as long as the level 113.88 protects any invasion to the lower side, look for potential long positions with an ideal target at 124.03